Oil prices soared and stock futures fell Sunday evening as traders digested fresh tensions between the United States and Iran over the crucial Strait of Hormuz.
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U.S. crude oil rose more than 7% to about $90 a barrel, while international Brent crude rose 5% to about $95 a barrel.
S&P 500 futures fell nearly 0.8%, Nasdaq 100 futures fell 0.7% and Dow futures fell 500 points, or 0.7%. Russell 2000 futures fell 1.4%.
Wholesale gas prices also rose more than 4%, and heating oil futures, a proxy for jet fuel prices, soared 7%. Natural gas prices rose 2%.
The move added to weeks of dramatic ups and downs as investors try to digest near-daily swings between war and peace. Major U.S. stock indexes have recently recovered all their losses since the start of the war, but oil prices remain high, making gas more expensive for consumers and increasing inflation.
Of particular concern is the Strait of Hormuz, a vital waterway off the coast of Iran through which more than 20% of the world’s oil supplies typically pass.
Iran declared the strait open to commercial shipping on Friday, causing oil prices to plummet by 11%. But it later retracted its statement over the weekend, accusing the United States of only “partially implementing the ceasefire.”
Iran declared another blockade of the strait, and dozens of commercial ships attempting to leave the strait were turned back, leaving them trapped on the western side of the vital strait.
Shipping giant CMA CGM announced on Saturday that one of its ships had been hit by shelling. “CMA CGM confirms that one of its vessels was the subject of warning shots yesterday,” a spokesperson told NBC News on Sunday. “The crew is safe and there are no injuries.”
President Donald Trump also said Iran attacked the ship.
“Yesterday, Iran decided to fire shots in the Strait of Hormuz, a complete violation of the ceasefire agreement,” President Trump wrote on Truth Social on Sunday morning. “Many of them were aimed at French ships and British cargo ships.”
Tensions further escalated, with President Trump later saying that US forces had “put a hole” in the engine room of an Iranian ship that was “trying to break through the naval blockade.”
“U.S. Marines are currently in custody of the ship,” he said.
U.S. Central Command released footage of shots being fired at the ship from a U.S. Navy guided-missile destroyer, adding that Marines had boarded the ship.
“Iran will soon react and retaliate against this act of armed piracy and theft by the US military,” Iran’s military spokesperson said on state television.
No commercial ships were recorded passing through the strait on Sunday as the latest developments unfolded, according to data from maritime tracking company Kpler.
Traders were also keeping an eye on the status of the U.S.-Iran peace talks, which President Trump said would be held in Islamabad on Sunday morning.
“My representative is going to Islamabad, Pakistan. We will arrive there tomorrow evening for negotiations,” he said.
However, Iranian state media later stated that “the reports published about the second round of negotiations in Islamabad are not true.” Further details remained unclear as of Sunday night.
